The isolated fat cell is the most widely used model system in endocrinology. By direct action on adenylate cyclase, some hormones are thought to stimulate or inhibit lipolysis by, respectively, increasing or decreasing cellular cAMP. Determination of the activation state of the cAMP target, cAMP-dependent protein kinase (A kinase), provides an indirect measurement of cAMP relevant to metabolic reactions. A kinase activity, expressed as an activity ratio, denotes that fraction of the total enzyme activated by endogenous cAMP. Previously we found that fat cells prepared according to classical procedures exhibit highly variable A kinase activities, from less than 0.1 to greater than 0.6, a problem caused by variable amounts of contaminating adenosine in cell suspension media. Since adenosine is an adenylate cyclase inhibitor, its removal leads to cyclase activation and, consequently, increased A kinase activity. Supplementation of all cell preparative media with 200 nM adenosine yields cells with low A kinase, 0.05, identical to that in the fat pads from which cells are isolated. Technical improvements in the manipulation of adipocytes has permitted an assessment of the steady state relationship between A kinase activity ratios and lipolysis, as determined by glycerol release from cells. A gradation of cellular cAMP concentrations was produced with either adenylate cyclase stimulators (ACTH, glucagon, isoproterenol) or upon addition of adenosine deaminase to remove adenosine plus adenylate cyclase inhibitors (phenylisopropyladenosine, prostaglandins, nicotinic acid). Regardless of the ligands used to modify cAMP, the complete range of lipolytic response occurs as A kinase rises from 0.05 to 0.25. Thus, with respect to lipolysis, the hormones appear to act via the cAMP pathway. As with the other antilipolytic agents, insulin decreases lipolysis in concert with a decrease in A kinase over the critical range noted above. However, insulin effects on both lipolysis and A kinase activity are limited to conditions of adenylate cyclase stimulation by lipolytic hormones. When stimulated by adenosine removal, neither lipolysis nor kinase is inhibited by insulin. These data suggest that insulin acts directly to inhibit adenylate cyclase by a mechanism that differs from that used by adenosine, prostaglandins, and nicotinic acid.